On Wednesday, AMD CEO Lisa Su spoke about the freshly revealed Instinct MI300X, a beefy GPU geared towards AI-based servers, which Microsoft and Meta have both decided to implement.The rise in AMD stocks on Thursday suggests that traders think AMD has a real chance of snatching a sizable portion of the AI chip market away from Nvidia.
Shares of AMD surged 9.9% on Thursday to close at $128.37 -- its largest single-day increase since May and its highest close since June. This surge came a day after AMD unveiled new chips designed for Artificial Intelligence (AI)-dependent applications to rival ones from Nvidia. In response to this announcement, CEO Lisa Su highlighted AMD's Instinct MI300X, a high-end processor intended for servers specialized in AI-oriented tasks. Nvidia has enjoyed a dominant position in the AI chip market over the past year, but cloud providers and tech companies have been looking for an alternative to reduce costs and obtain more flexibility. Thursday's rise in AMD shares seemed to indicate that investors believe the chipmaker can capture a significant portion of the AI chip market share from Nvidia, despite AMD estimating their AI GPU sales in 2024 will stand at $2 billion, a figure below market expectations for Nvidia. Meanwhile, analyst predictions depict Nvidia as likely to generate more than $16 billion in data center sales in the current quarter. AMD's new chip is expected to start shipping in massive numbers next year. Analysts from Deutsche Bank and Citi have asserted that AMD is very well positioned to benefit from the large AI market, which is projected to attain $400 billion in the coming four years. Su expressed that Nvidia will retain a majority of the market, but AMD should also hold a "nice piece" of it.
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